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Soviet Union [USSR] Structural Reform of Industry
Perestroika called for wholesale revision of the
industrial management system and decentralization of policy making
in all industries. Elements of the management bureaucracy opposed
such revision because it would place direct responsibility for poor
performance and initiative on industry officials. Initial
adjustment to the program was slow and uneven; in the late 1980s,
tighter quality control cut production figures by eliminating
substandard items. In mid-1988, eighteen months after
perestroika had been introduced in major industries,
official Soviet sources admitted that much of the program was not
yet in place.
The Military-Industrial Complex
Growth in the Soviet economy slowed to 2 percent annually in
the late 1970s, and it remained at about that level during the
1980s, after averaging 5 percent during the previous three decades.
Because military supply remained the primary mission of industry,
the military was protected from the overall slowdown. Thus, in 1988
the military share of the gross national product
(
GNP--see Glossary) had grown to an estimated 15 to 17 percent, up from its
12 to 14 percent share in 1970. The actual percentage of industrial
resources allocated to military production has always been unclear
because of Soviet secrecy about military budgets. Most military
production came under the eighteen ministries of the machinebuilding and metal-working complex (MBMW), nine of which were
primarily involved in making weapons or military matériel (see
table 33, Appendix A).
Other "military-related" ministries sent a smaller percentage
of their output to the military. Among their contributions were
trucks (from the Ministry of Automotive and Agricultural Machine
Building, under MBMW), tires and fuels (from the Ministry of
Petroleum Refining and Petrochemical Industry, outside MBMW), and
generators (from the Ministry of Power Machinery Building, under
MBMW), plus any other items requested by the military. In overall
control of this de facto structure was the
Defense Council (see Glossary), which in the 1980s was
chaired by the general secretary
of the CPSU. Although the Council of Ministers nominally controlled
all ministries, including those serving the military, military
issues transcended that authority. In 1987 an estimated 450
research and development organizations were working exclusively on
military projects. Among top-priority projects were a
multiministerial laser program, generation of radio-frequency
energy, and particle-beam research--all applicable to future
battlefield weapons. In addition, about fifty major weapons design
bureaus and thousands of plants were making military items
exclusively. Such plants had first priority in resource allocation
to ensure that production goals were met. Most defense plants were
in the European part of the Soviet Union, were well dispersed, and
had duplicate backup plants. Some major aircraft plants were beyond
the Urals, in Irkutsk, Novosibirsk, Tashkent, Komsomol'sk-na-Amure,
and Ulan-Ude.
In making military equipment, the primary goals were simplicity
and reliability; parts were standardized and kept to a minimum. New
designs used as many existing parts as possible to maximize
performance predictability. Because of these practices, the least
experienced Soviet troops and troops of countries to which the
equipment was sold could operate it. But the practices have also
caused the Soviet military-industrial complex, despite having top
priority, to suffer from outmoded equipment, much of which is left
over from World War II. Western observers have suggested that the
dated "keep-it-simple" philosophy has been a psychological obstacle
to introducing the sophisticated production systems needed for
high-technology military equipment. Western experts have assumed
that without substantial overall economic expansion, this huge
military-industrial complex would remain a serious resource drain
on civilian industry--although the degree of that drain has been
difficult to establish. To aneliorate the situation,
perestroika set a goal of sharply reducing the military
share of MBMW allocations (estimated at 60 percent in 1987) during
the Twelfth Five-Year Plan. Civilian MBMW ministries were to
receive an 80 percent investment increase by 1992. And emphasis was
shifting to technology sharing by military designers with their
civilian counterparts--breaking down the isolation in which the two
sectors have traditionally worked.
Data as of May 1989
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